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Hagan v. Pennington

Court of Appeals of Texas, Fifth District, Dallas

June 19, 2019

JOHN P. HAGAN, Appellant
v.
JAMES E. PENNINGTON, Appellee

          On Appeal from the County Court at Law No. 5 Collin County, Texas, Trial Court Cause No. 005-00175-2017

          Before Justices Bridges, Partida-Kipness, and Carlyle.

          MEMORANDUM OPINION

          DAVID L. BRIDGES JUSTICE.

         The underlying proceedings of this appeal involve appellee James E. Pennington's breach of contract claim against appellant John P. Hagan and Hagan's subsequent legal malpractice counterclaim against Pennington. The trial court granted two summary judgments in favor of Pennington. A jury subsequently awarded Pennington $62, 628 in attorney's fees for litigating his breach of contract claim. Hagan raises seven issues on appeal. He challenges the jury's $62, 628 award of attorney's fees. He further challenges the trial court (1) granting the summary judgments, (2) denying a motion for new trial or motion for judgment notwithstanding the verdict, (3) denying an in camera motion for inspection of documents, (4) denying a motion to compel documents, (5) and failing to award post-judgment interest. We affirm the trial court's judgment.

         Background

         In early June of 2014, Hagan entered into a legal services agreement with Pennington in which Pennington agreed to represent Hagan "in a lawsuit and/or arbitration against [Hagan's] former partner, Gary D. Sarles, arising from Sarles' breach of an Income Partner Agreement between [Hagan] and Sarles, and a related matter involving a pending lawsuit/arbitration against Sarles' office manager, Kelly Wilcox." Hagan agreed to pay Pennington $400 an hour for his services. Hagan paid for some, but not all, of Pennington's legal fees. Specifically, he paid $45, 120, but refused to pay the $17, 320 Pennington billed for preparing and representing Hagan in the arbitration proceeding.

         After Hagan refused to pay the demanded fees, Pennington withdrew as his attorney. His withdrawal occurred about a month before the final arbitration hearing. The final arbitration award provided, among other things, that Sarles breached the Income Partner Agreement and awarded Hagan attorney's fees pursuant to civil practice and remedies code section 38.001. Thus, despite Pennington withdrawing, Hagan achieved some success in arbitration.

         Pennington subsequently filed a breach of contract lawsuit to recover the $17, 320 in unpaid attorney's fees. Hagan answered and filed a legal malpractice counterclaim. Hagan alleged Pennington breached his duty of care by failing to advise him that a provision in the arbitration agreement prohibited the recovery of pro se attorney fees, meaning Hagan could not recover the $74, 707 in damages he allegedly suffered as a result of his decrease in billable hours during the time he worked pro se on the arbitration.

         Pennington filed a motion for summary judgment on Hagan's legal malpractice counterclaim, which the trial court granted. Pennington filed a second motion for summary judgment on his attorney's fees in the underlying arbitration, which the trial court also granted. The only remaining issue for trial was the reasonableness and necessity of Pennington's fees in pursuing his breach of contract claim in the trial court litigation. Pennington sought $162, 000 in attorney's fees for pursuing his $17, 320 breach of contract claim.

         After a two-day trial, a jury awarded Pennington $62, 628. Hagan filed a motion for new trial and a judgment notwithstanding the verdict, which the trial court denied. The court's second amended final judgment memorialized the prior $17, 320 award for legal services in the underlying arbitration and that Hagan take nothing on his counterclaim and third-party petition for legal malpractice. It awarded $1, 914 in sanctions against Pennington related to a gag order, which is not subject of this appeal. The trial court further awarded Pennington his appellate attorney's fees and post-judgment interest. Hagan filed a second motion for new trial and judgment notwithstanding the verdict, which the trial court again denied. This appeal followed.

         Summary Judgment: Legal Malpractice

         In his second issue, Hagan argues the trial court erred by granting Pennington's first motion for summary judgment on his legal malpractice counterclaim because the court disregarded expert testimony establishing Pennington owed Hagan a heightened duty of care, which Pennington breached thereby causing Hagan damages. Pennington responds the trial court properly granted summary judgment on traditional grounds because Hagan incorrectly interprets the relationship between the Civil Rights Attorney's Fee Award Act of 1976 and section 38.001 of the civil practice and remedies code in awarding attorney's fees. Pennington also contends the trial properly granted a no-evidence summary judgment because Hagan failed to timely designate his expert witness to support his arguments.

         The standards of review for traditional and no-evidence summary judgments are well known. See Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). In a traditional motion for summary judgment, the movant has the burden to demonstrate that no genuine issue of material fact exists, and it is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c). We review a no-evidence summary judgment under the same legal sufficiency standard used to review a directed verdict. Tex.R.Civ.P. 166a(i); Gish, 286 S.W.3d at 310. To defeat a no-evidence summary judgment, the nonmovant is required to produce evidence that raises a genuine issue of material fact on each challenged element of its claim. Gish, 286 S.W.3d at 310; see also Tex. R. Civ. P. 166a(i).

         In reviewing both a traditional and no-evidence summary judgment, we consider the evidence in the light most favorable to the nonmovant. Smith v. O'Donnell, 288 S.W.3d 417, 424 (Tex. 2009). We credit evidence favorable to the nonmovant if reasonable jurors could, and we disregard evidence contrary to the nonmovant unless reasonable jurors could not. Gish, 286 S.W.3d at 310.

         When a party files a hybrid summary judgment motion on both no-evidence and traditional grounds, we generally first review the trial court's judgment under the no-evidence standard of review. Rico v. L-3 Commc'ns Corp., 420 S.W.3d 431, 439 (Tex. App.-Dallas 2014, no pet.). Should we determine summary judgment was appropriate under the no-evidence standard, we need not address issues related to the traditional summary judgment motion. Id.

         To decide whether Pennington was entitled to a no-evidence summary judgment, we must consider what evidence, if any, the trial court considered in making its ruling. Hagan argues the trial court ignored controverting expert testimony of Tom C. Clark. Pennington argues a no-evidence summary judgment was appropriate because Hagan failed to timely designate Clark or secure a ruling on his motion to designate a late expert witness. Hagan responds he timely designated Clark because on April 7, 2017, the trial court moved the discovery deadline, thereby making his February 22, 2017 designation of Clark timely pursuant to Texas Rule of Civil Procedure 195.2(a). See Tex. R. Civ. P. 195.2(a) (expert designations due ninety days before the end of discovery).

         Hagan, seemingly acknowledging he missed the deadline for designating an expert witness, filed his motion for leave to file late designation of expert witnesses on February 22, 2017. In the motion, he sought to designate Clark to testify about Pennington's failure to exercise reasonable care in the underlying breach of contract case. Hagan argued Pennington would not be unfairly prejudiced or unfairly surprised because there was no trial setting at that time, and Pennington would have ample time to depose Clark.

         Pennington filed his first hybrid motion for summary judgment on February 28, 2017 and argued the trial court should dismiss Hagan's counterclaim and third party claim because there was no evidence supporting essential elements of a legal malpractice claim, and Hagan's claim failed as a matter of law because Texas law allows for recovery of pro se attorney's fees.

         On April 7, 2017, the trial court, "having considered the motion, response, and evidence filed with the Court," granted summary judgment in favor of Pennington on Hagan's counterclaim for malpractice/negligence and ordered Hagan take nothing "on his counterclaim or his third party petition." The trial court did not specify the grounds on which it granted summary judgment. It also did not indicate it granted Hagan leave to file his expert designation of Clark.

         Approximately two months later, on June 6, 2017, Hagan filed a motion to reconsider the trial court's first summary judgment order. In the motion, he argued the trial court erred in granting the motion for summary judgment by considering Pennington's new (and untimely) evidence and by considering Pennington's new arguments raised in his reply to Hagan's response to summary judgment. Hagan again requested leave to submit the Declaration of Expert Tom Clark on the issue of malpractice. Hagan asked the court to reconsider its summary judgment ruling and allow him to file his sur-reply, in which he included the expert Declaration of Tom Clark on Negligence/Malpractice, among other attached exhibits.

         On July 6, 2017, the trial court held a hearing on Hagan's motion for reconsideration. At the conclusion of the hearing, the court stated, "In an abundance of caution, I am going to grant the motion to reconsider and allow the surreply." The trial court did not indicate it was considering the evidence attached to the sur-reply or the expert Declaration of Tom Clark. The written order states, "The Court, after considering said Motion, Pennington's Response, the argument of counsel, and the case law submitted by the Parties, finds that Hagan's Motion for Reconsideration is well-taken and should be, in all things, GRANTED."

         On July 17, 2017, the trial court signed another order in which it again "ORDERED that Plaintiff's First Motion for Summary Judgment is granted and that Defendant John Hagan shall take nothing on his counterclaims or his third party petition." The order stated the trial court made its ruling "after careful and impartial consideration of Plaintiff's First Motion for Summary judgment and evidence attached thereto, Defendant's response and evidence attached thereto, Plaintiff's reply, Defendant's Sur-reply, Plaintiff's Objection to and Motion to Strike the Untimely Declaration of Tom Clark, Plaintiff's Evidentiary Objections to the Evidence Attached to Defendant's Sur-reply, and all relevant case authorities presented therein." Like the order granting the motion for reconsideration, the July 17, 2017, order did not indicate the trial court considered the evidence attached to Hagan's sur-reply or the expert Declaration of Tom Clark.

         When a motion to reconsider is filed after the rendition of summary judgment, a trial court has discretion to consider the grounds in the post-judgment motion and supporting proof and reaffirm its summary judgment based on the entire record. PNP Petroleum I, LP v. Taylor, 438 S.W.3d 723, 729 (Tex. App.-San Antonio 2014, pet. denied). The trial court also has the discretion to simply deny a motion filed after entry of summary judgment without considering its substance. Id. "The efficacy of a post-summary judgment motion to preserve a complaint for appellate review depends upon whether the trial court affirmatively considers the new grounds and proof as memorialized by a written order." Id. (quoting Timothy Patton, Summary Judgments in Texas § 7.06[1] (3d ed. 2012)). Thus, a trial court may accept summary judgment evidence filed late, even after summary judgment, as long as the court affirmatively indicates in the record that it accepted or considered it. Stephens v. Dolcefino, 126 S.W.3d 120, 133 (Tex. App.-Houston [1st Dist.] 2003, pet. denied). But ordinarily, when a motion for reconsideration is filed after a summary judgment motion is heard and ruled upon, the trial court may only consider the record as it existed before hearing the motion for the first time. See Circle X Land & Cattle Co. v. Mumford Ind. Sch. Dist., 325 S.W.3d 859, 863 (Tex. App. -Houston [14th Dist.] 2010, pet. denied).

         For example, an order stating, "The Court has considered the motion for new trial and motion for reconsideration of [Defendants] Traditional Motion for Summary Judgment filed by [Plaintiff], any response, the arguments of counsel, and the papers on file" did not affirmatively indicate the trial court accepted or considered the later-filed evidence attached to plaintiff's motions for new trial and reconsideration. NMRO Holdings, LLC v. Williams, No. 01-16-00816-CV, 2017 WL 4782793, at *5 (Tex. App.-Houston [1st Dist.] Oct. 24, 2017, no pet.) (mem. op.) (denying motion for rehearing of motion for summary judgment). Thus, the appellate court did not consider the evidence and was limited in its review of the summary judgment to the arguments and evidence presented in the initial summary judgment. Id. But see also Circle X Land & Cattle Co., 325 S.W.3d at 863 (appellate court reviewed evidence attached to motion to reconsider where order reflected affidavits and exhibits were considered by trial court).

         This Court reached a similar result in Morris v. Unified Housing Foundation Inc., No. 05-13-01425-CV, 2015 WL 4985599, at *6 (Tex. App.-Dallas Aug. 21, 2015, no pet.) (mem. op.). In that case, the plaintiffs filed a motion to set aside a summary judgment and filed a supplement including a letter from a psychologist. "Because that letter was filed after the trial court granted summary judgment and there is no indication that the trial court considered it," we did not consider the letter when reviewing the propriety of that judgment. Id. But see Stephens, 126 S.W.3d at 134 (trial court verbally ruled it would include the evidence offered at the hearing on the motion to reconsider the summary judgment thereby affirmatively indicating he accepted the evidence before reaffirming its prior ruling).

         Here, neither the order granting Hagan's motion for reconsideration of Pennington's first motion for summary judgment nor the subsequent order reaffirming summary judgment in Pennington's favor indicate the trial court considered any evidence attached to Hagan's sur-reply. To the extent Hagan argued during the July 6, 2017 hearing that the court should allow him to file the sur-reply and consider his expert's declaration, listening to arguments is not an indication that a trial court considered evidence. See, e.g., Soloman v. Whataburger Restaurants, LLC, No. 04-17-00255-CV, 2018 WL 2121360, at *2 (Tex. App.-San Antonio May 9, 2018, no pet.) (mem. op.) (trial court listening to arguments presented at a hearing on a motion for new trial was not an affirmative indication the trial court considered evidence attached to motion for new trial); see also Wakefield v. Ayers, No. 01-14-00648-CV, 2016 WL 4536454, at *7 n.6 (Tex. App.-Houston [1st Dist.] Aug. 30, 2016, no pet.) (mem. op.) (trial court did not affirmatively indicate at hearing on a motion to vacate summary judgment that it considered late-filed affidavit in reaching its decision). Hagan did nothing to insure that the trial court "affirmatively indicated on the record" it considered the new evidence.[1] It was his burden to obtain a ruling on his motion for leave to designate Clark and ensure the record reflects either the trial court's ruling or refusal to rule on his motion. Tex.R.App.P. 33.1; Cruz v. Schell, Beene & Vaughn, L.L.P., No. 05-01-00565-CV, 2012 WL 3194074, at *3 (Tex. App.-Dallas Aug. 7, 2012, pet. denied) (mem. op.).

         To the extent Hagan argues his expert designation became timely when the trial court moved the discovery deadline during the April 7, 2017 hearing, thereby eliminating his requirement to seek leave of court, we are unpersuaded.[2] As explained above, nothing in the trial court's orders indicate it considered any additional evidence after it granted the original motion for summary judgment.[3] As such, we find no basis in the record to compel review of the evidence attached to Hagan's sur-reply, which included Clark's expert declaration. Accordingly, we are limited in our review of the evidence presented in the initial summary judgment. See, e.g., PNP Petroleum I, LP., 438 S.W.3d at 730; Circle X Land & Cattle Co., 325 S.W.3d at 863.

         In Texas, a plaintiff in a legal malpractice suit is required to present expert testimony regarding causation and the standard of skill and care ordinarily exercised by an attorney. See Cantu v. Horany, 195 S.W.3d 867, 873 (Tex. App.-Dallas 2006, no pet.). Although Hagan filed a motion for leave to designate Clark as an expert prior to Pennington filing his no-evidence motion for summary judgment, Hagan failed to obtain a ruling on his motion prior to filing his response on March 29, 2017 or the trial court ruling on the summary judgment on April 7, 2017. By not providing any expert testimony in his summary judgment response, Hagan failed to produce evidence raising a genuine issue of material fact on each challenged element of his legal malpractice cause of action. See Tex. R. Civ. P. 166a(i); see also Gish, 286 S.W.3d at 310. Accordingly, the trial court properly granted Pennington's no-evidence motion for summary judgment. Because the trial court did not err by granting a no-evidence summary judgment, we need not address Hagan's arguments related to the traditional summary judgment motion. Rico, 420 S.W.3d at 439.

         Finally, Hagan argues the trial court erred by granting summary judgment in favor of third party defendant, the Law Offices of James E. Pennington, P.C. (JEP), because neither Pennington nor JEP moved for summary judgment on Hagan's third-party claims. He argues "that was error and Hagan did not waive this argument by not objecting to the trial court," citing Dillard v. NCNB Texas National Bank, 815 S.W.2d 356, 359 (Tex. App.-Austin 1991, no writ), disapproved of on other grounds by Amberboy v. Societe de Banque Privee, 831 S.W.2d 793, 797 (Tex. 1992). In Dillard, the court determined "no such objection was required in the present case in order to preserve error" because "[w]e cannot sustain a theory of waiver based upon a party's failure to object to a matter concerning which his opponent's motion for summary judgment is silent, and . . . without a motion therefor to which a response could be filed." Id. First, this is not a case in which Pennington's motion was silent regarding his challenges to Hagan's legal malpractice claim. His motion explained Hagan's failure to produce any evidence supporting his legal malpractice claim. Although Hagan filed his third party petition against JEP after Pennington filed his motion for summary judgment, Hagan did not raise any distinct complaints against JEP that were not encompassed by Hagan's claim against Pennington, individually.

         More importantly, the facts of this case indicate both parties proceeded as if the trial court had in fact granted summary judgment in favor of JEP. The trial court's April 7, 2017, order stated summary judgment "is hereby granted against John Hagan on this counterclaim for malpractice/negligence and that John Hagan shall take nothing on his counterclaim or his third party petition." The trial court's July 17, 2017 order included the same language that Hagan "take nothing on his counterclaim or his third party petition." Hagan never raised an objection or asked the trial court to reconsider its ruling based on granting more relief than Pennington requested.

         In the July 21, 2017 hearing, Pennington's attorney commented, "[the trial court has] already ruled on summary judgment, and the only issue left for trial is now on attorney's fees." The case then went to trial on attorney's fees. The procedural posture of the case was again memorialized, without objection, in the trial court's second amended final judgment, in relevant part, as follows:

On August 28, 2017, the Court called this case for trial to determine the last remaining issue in this case regarding the amount of Plaintiff's attorney's fees in this lawsuit (the Court previously disposed of all other issues by summary judgment). . . .
The court has also previously ordered that Hagan shall take nothing on his counterclaim and his third-party petition for malpractice/professional negligence against Pennington and Law Offices of James E. Pennington.

         Hagan had repeated opportunities to raise his objection to the trial court but did not. We do not find Dillard persuasive under these facts. We overrule Hagan's first issue.

         Summary Judgment: Breach of Contract

         In his third issue, Hagan argues the trial court erred by granting Pennington's second traditional motion for summary judgment because he raised a genuine issue of material fact on at least one element of Pennington's breach of contract claim. Hagan relies on the "Second Declaration of Tom Clark: Reasonableness and Necessity of Fees Sought by James E. Pennington in the 2015 Arbitration" and other evidence to raise a fact issue regarding the reasonableness of attorney's fees. Pennington responds summary judgment was proper because (1) Hagan failed to timely designate Clark; (2) his later attempt to designate was ...


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